Best Buy to exit China

Electronics retailer to focus on core U.S. operations after struggling in Asian giant

By

LaurieBurkitt

Bloomberg

BEIJING—Best Buy Co. is selling its China division to a Chinese real estate group, exiting a country where the American electronics retailer has struggled for years as it streamlines its global business to focus on its core U.S. operations.

Best Buy
BBY, +1.54%
is selling Jiangsu Five Star Appliance Co. to Chinese real estate company Zhejiang Jiayuan Real Estate Group Co. for an undisclosed amount, a spokeswoman for Best Buy said Thursday. She said that Best Buy is exiting the China market except for its sourcing operations, and that the sourcing of its private-label products—everything from tablets and cords to televisions—is projected to grow. The Wall Street Journal reported in June that Best Buy was considering a sale of its China business and that a sale could fetch around $300 million.

The move comes as Richfield, Minn.-based Best Buy carries out a turnaround plan that Chief Executive Hubert Joly launched after taking the helm two years ago when online rivals were ravaging Best Buy’s sales.

As part of the turnaround efforts, Best Buy has invested heavily in its website and has leaned on suppliers to help finance improvements to its more than 1,400 U.S. stores. It also exited Europe last year, selling its 50% interest in Carphone Warehouse Group PLC’s European business back to Carphone in a mostly cash deal valued at about $775 million.

In China, a slowing economy is presenting challenges for many multinational companies in what has been a key growth market. Rivalry with local Chinese companies is also intensifying online and off, further sparking many to rethink their strategies.

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